2014's clean energy battlelines

Business is breathing a post-election sigh of relief, except for the clean energy sector which faces an avalanche of uncertainty in 2014 starting with the RET and carbon repeal.

For many in the business community the regulatory uncertainty and lack of investment confidence surrounding an election can safely be put behind them. But for those businesses focused on making a profit through reducing carbon emissions, the uncertainty and doubt is about to pick up some serious steam.

The year ahead will involve so many reviews related to clean energy government policies, it will start to feel like the Spanish Inquisition. 

Renewable Energy Target up for review … again

Probably the biggest is the review of the Renewable Energy Target, less than 12 months after the government of the day responded to the prior one.

We’re now into the new year and the government is still yet to release the terms of reference nor name who will be conducting the inquiry. Naturally, the wind industry will go into a state of suspended animation as it awaits the outcome of the review.

The Australian newspaper cites an unnamed “senior government” source (whatever that means) claiming that only ministers Greg Hunt and Ian Macfarlane are left in Cabinet supporting the scheme. However, this seems a little odd as Malcolm Turnbull pushed very strongly while in the Howard government for the RET to be expanded – so one can’t be sure as to the reliability of such an assertion.

Even so, the renewables sector would be somewhat buoyed by the fact that the two ministers with direct responsibility for the scheme, and Macfarlane in particular (who in the past hasn’t been all that enthusiastic about renewable energy) support the RET.
However, if the government ends up nominating the Productivity Commission to undertake the review then everyone will know this is a stitch-up job. This is because the Productivity Commission has made no secret of its disdain of the scheme, criticising it and measures like it on a number of occasions.  

Will the carbon price be repealed and what will replace it?

Another area where doubt will swirl surrounds the carbon price and the Coalition’s proposed replacement – the Emission Reduction Fund. 

Firstly, we’ve probably got to go through a re-run of the WA half senate election which might possibly make Abbott’s repeal of the carbon price substantially harder (see: A hideous beast awaits Abbott’s return by Rob Burgess). If the WA senate election were to return a similar make-up to the prior vote, there’s always the possibility one of the independent senators seizes the opportunity of repeal to play hardball. This could then act to delay repeal and if it were to stretch on into September then things could get very messy. At such point, it might be easier to simply let the scheme run for another year.

Simultaneously, the government needs to cobble together a mechanism for it to purchase abatement that isn’t dogged by bureaucracy but which also isn’t corrupted into a taxpayer-funded windfall for polluters. The Senate has already got a review on into the scheme, even though we’ve only just managed to see the Green Paper. Many more submissions will be written before the Emission Reduction Fund hands out a single dollar for avoided CO2.

What will be the shape of energy efficiency target schemes?

Two of the other major tradeable certificate abatement schemes in Australia – the NSW Energy Efficiency Scheme and the Victorian Energy Efficiency Target – are also up for review this year. As discussed in a prior article, preliminary indications are that the NSW government sees value in expanding its scheme but there are doubts about Victoria’s scheme continuing and a belief it is, at least, likely to be scaled down. However, the Victorian Energy Minister Kotsiras just resigned and another minister may be more enthusiastic about the program.

Injecting greater competition into the energy sector

Another matter likely to be of keen interest to the energy sector is the Competition Policy Review. This is something worth delving  deeper into in another article, as there are a range of challenges requiring better scrutiny. These include the inability for demand-side technologies to compete against monopoly networks, the dominance of the big three gentailers in the National Electricity Market, the transparency and concentration of suppliers in the gas market and government ownership and continued involvement in the electricity sector.

Will wind turbines finally be revealed as evil?

Of course, the saga of trying to pin wind power down as responsible for health problems continues. We are still awaiting the outcome of the National Health and Medical Review Council review of the evidence that was commissioned some time ago. It was supposed to report midway through last year, then this was pushed out to the latter part of 2013, but still nothing has materialised. Climate Spectator has asked the NHMRC when can the public expect the report but has yet to receive a reply. At the same time, it’s possible the government may waste taxpayers' money conducting another review on top of the one the NHMRC is in the process of completing.

Insulation’s $20 million marketing boost

Another questionable use of taxpayers funds is the $20 million Royal Commission into the prior government’s insulation rebate. While the government’s target is probably to smear Labor – the insulation industry needs this like a hole in the head. It’ll again have to deal with media reports suggesting insulation is somehow dangerous when it’s been used for decades perfectly safely.

It looks like 2014 is shaping up to be so much fun.

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